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. Last Updated: 07/27/2016

$20M Damages Award Threatens Big Tobacco

LOS ANGELES -- A California lung cancer victim who began smoking only after warning labels were placed on cigarette packs won $20 million in punitive damages Monday from two tobacco companies, demonstrating how far the industry's legendary legal fortunes have fallen.

The award against Philip Morris Inc. and R.J. Reynolds Tobacco Co. in itself will have minimal financial consequences for the companies, which sell $20 million worth of cigarettes in a few hours' time.

But the verdict appeared to shatter the notion that tobacco companies, despite their other legal woes, at least were safe from claims by those who took up smoking after warnings appeared in the 1960s.

If such claimants can prevail, it means "the tobacco companies face a virtually unlimited pool of prospective plaintiffs," said Stephen Gillers, a law professor at New York University. "In other words, they don't have a shut-off valve."

The verdict in San Francisco Superior Court, capping a 2 1/2 month trial, brought the total damage award to Leslie Whiteley and her husband to $21.7 million.

Whiteley, 40, a mother of four in Ojai, California, about 100 kilometers northwest of downtown Los Angeles, is gravely ill with lung cancer that has spread to her brain and liver.

Whiteley began smoking at age 13 in 1972, well after warnings were introduced. That element of her smoking history, along with evidence about her years-long alcohol abuse and use of marijuana, appeared very favorable to the defense.

But in the third consecutive West Coast defeat for the tobacco industry, the 12-member jury last week found Philip Morris and Reynolds, makers of the brands Whiteley smoked and the top two U.S. cigarette manufacturers, liable for negligence and fraud. Jurors awarded $1.72 million in compensatory damages to Whiteley and her husband, Leonard Whiteley, setting the stage for the punitive damages phase that concluded Monday.

"We're disappointed ... and certainly intend to appeal," said Daniel Donahue, senior vice president and deputy general counsel for R.J. Reynolds.

William Ohlemeyer, vice president and associate general counsel for industry leader Philip Morris, said the verdict "flies in the face of common sense to suggest that an individual who ... never smoked a cigarette from a package that did not have a surgeon general's warning on it was somehow uninformed or misled about the health risks of smoking."

Ohlemeyer said he believes the companies have a strong basis for appeal, arguing that the judge in the case erred in allowing the jury to consider evidence of cigarette ads that appeared before Whiteley was born, and company "statements or conduct that she never heard or relied upon in making her decisions to smoke."

"We're thrilled," said Madelyn Chaber, lead attorney for Whiteley. "I think the message is that you can't put a label on a product and then lie and misrepresent,'' she said. "Hopefully, that's the message to the rest of the corporate world."

Several jurors later said they discussed a range of possible awards, from nothing to more than $1 billion, leading to a 9-3 compromise on the $20 million figure.

Some "wanted a much higher amount. They wanted to shut down Big Tobacco," said panelist Leonard Bove, a waste-water treatment plant operator in Redwood City.

Jury foreman Michael Criscola said other jurors were influenced by industry testimony about the companies' recent acceptance of controls on some of its marketing efforts.

Tobacco cases proceed at glacial speed, and at no time have as many as 10 gone to trial in a single year. Some analysts said the large punitive award could quicken the pace by drawing more plaintiffs' attorneys into the litigation and triggering thousands more claims.

But Bill Pecoriello, a tobacco analyst with Sanford C. Bernstein & Co., said the number of filings is unlikely to grow dramatically until it is shown that at least some plaintiffs' verdicts can withstand appeals.